7-1-703.  Restrictions on acquisition of institutions and holding companies — Enforcement.

(1)  Unless the commissioner gives prior written approval under Section 7-1-705, a person may not:

Terms Used In Utah Code 7-1-703

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Branch: means a place of business of a financial institution, other than its main office, at which deposits are received and paid. See Utah Code 7-1-103
  • Commissioner: means the Commissioner of Financial Institutions. See Utah Code 7-1-103
  • Control: means the power, directly or indirectly, or through or in concert with one or more persons, to:
(a) direct or exercise a controlling influence over:
(i) the management or policies of a financial institution; or
(ii) the election of a majority of the directors or trustees of an institution;
(b) vote 20% or more of any class of voting securities of a financial institution by an individual; or
(c) vote more than 10% of any class of voting securities of a financial institution by a person other than an individual. See Utah Code 7-1-103
  • Department: means the Department of Financial Institutions. See Utah Code 7-1-103
  • Depository institution: means a bank, savings and loan association, savings bank, industrial bank, credit union, or other institution that:
    (a) holds or receives deposits, savings, or share accounts;
    (b) issues certificates of deposit; or
    (c) provides to its customers other depository accounts that are subject to withdrawal by checks, drafts, or other instruments or by electronic means to effect third party payments. See Utah Code 7-1-103
  • Depository institution holding company: means :
    (i) a person other than an individual that:
    (A) has control over a depository institution; or
    (B) becomes a holding company of a depository institution under Section 7-1-703; or
    (ii) a person other than an individual that the commissioner finds, after considering the specific circumstances, is exercising or is capable of exercising a controlling influence over a depository institution by means other than those specifically described in this section. See Utah Code 7-1-103
  • Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
  • Home state: means :
    (a) for a state chartered depository institution, the state that charters the institution;
    (b) for a federally chartered depository institution, the state where the institution's main office is located; and
    (c) for a depository institution holding company, the state in which the total deposits of all depository institution subsidiaries are the largest. See Utah Code 7-1-103
  • Institution: means :
    (a) a corporation;
    (b) a limited liability company;
    (c) a partnership;
    (d) a trust;
    (e) an association;
    (f) a joint venture;
    (g) a pool;
    (h) a syndicate;
    (i) an unincorporated organization; or
    (j) any form of business entity. See Utah Code 7-1-103
  • Institution subject to the jurisdiction of the department: means an institution or other person described in Section 7-1-501. See Utah Code 7-1-103
  • Jurisdiction: (1) The legal authority of a court to hear and decide a case. Concurrent jurisdiction exists when two courts have simultaneous responsibility for the same case. (2) The geographic area over which the court has authority to decide cases.
  • Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
  • Out-of-state: means , in reference to a depository institution or depository institution holding company, an institution or company whose home state is not Utah. See Utah Code 7-1-103
  • Person: means :
    (a) an individual;
    (b) a corporation;
    (c) a limited liability company;
    (d) a partnership;
    (e) a trust;
    (f) an association;
    (g) a joint venture;
    (h) a pool;
    (i) a syndicate;
    (j) a sole proprietorship;
    (k) an unincorporated organization; or
    (l) any form of business entity. See Utah Code 7-1-103
  • State: means , unless the context demands otherwise:
    (a) a state;
    (b) the District of Columbia; or
    (c) the territories of the United States. See Utah Code 7-1-103
  • Subsidiary: means a business entity under the control of an institution. See Utah Code 7-1-103
  • Utah depository institution: means a depository institution whose home state is Utah. See Utah Code 7-1-103
  • Venue: The geographical location in which a case is tried.
  • (a)  acquire, directly or indirectly, control of a depository institution or depository institution holding company subject to the jurisdiction of the department;

    (b)  vote the stock of a depository institution or depository institution holding company subject to the jurisdiction of the department acquired in violation of Section 7-1-705;

    (c)  acquire all or a material portion of the assets of a depository institution or a depository institution holding company subject to the jurisdiction of the department;

    (d)  assume all or a material portion of the deposit liabilities of a depository institution subject to the jurisdiction of the department;

    (e)  take any action that causes a depository institution to become a subsidiary of a depository institution holding company subject to the jurisdiction of the department;

    (f)  take any action that causes a person other than an individual to become a depository institution holding company subject to the jurisdiction of the department;

    (g)  acquire, directly or indirectly, the voting or nonvoting securities of a depository institution or a depository institution holding company subject to the jurisdiction of the department if the acquisition would result in the person obtaining more than 20% of the authorized voting securities of the institution if the nonvoting securities were converted into voting securities; or

    (h)  merge or consolidate with a depository institution or depository institution holding company subject to the jurisdiction of the department.
  • (2)  A person who willfully violates this section or a rule or order issued by the department under this section is subject to a civil penalty of not more than $1,000 per day during which the violation continues. The commissioner may assess the civil penalty after giving notice and opportunity for hearing. The commissioner shall collect the civil penalty by bringing an action in the district court of the county in which the office of the commissioner is located. An applicant for approval of an acquisition is considered to have consented to the jurisdiction and venue of the court by filing an application for approval.

    (3)  The commissioner may secure injunctive relief to prevent a change in control or impending violation of this section.

    (4)  The commissioner may lengthen or shorten any time period specified in Section 7-1-705 if the commissioner finds it necessary to protect the public interest.

    (5)  The commissioner may exempt a class of financial institutions from this section by rule if the commissioner finds the exception to be in the public interest.

    (6)  The prior approval of the commissioner under Section 7-1-705 is not required for the acquisition by a person other than an individual of voting securities or assets of a depository institution or a depository institution holding company that are acquired by foreclosure or otherwise in the ordinary course of collecting a debt previously contracted in good faith if these voting securities or assets are divested within two years of acquisition. The commissioner may, upon application, extend the two-year period of divestiture for up to three additional one-year periods if, in the commissioner’s judgment, the extension would not be detrimental to the public interest. The commissioner may adopt rules to implement the intent of this Subsection (6).

    (7) 

    (a)  An out-of-state depository institution without a branch in Utah, or an out-of-state depository institution holding company without a depository institution in Utah, may acquire:

    (i)  a Utah depository institution only if it has been in existence for at least five years; or

    (ii)  a Utah branch of a depository institution only if the branch has been in existence for at least five years.

    (b)  For purposes of Subsection (7)(a), a depository institution chartered solely for the purpose of acquiring another depository institution is considered to have been in existence for the same period as the depository institution to be acquired, so long as it does not open for business at any time before the acquisition.

    (c)  The commissioner may waive the restriction in Subsection (7)(a) in the case of a depository institution that is subject to, or is in danger of becoming subject to, supervisory action under Chapter 2, Possession of Depository Institution by Commissioner, or Chapter 19, Acquisition of Failing Depository Institutions or Holding Companies, or, if applicable, the equivalent provisions of federal law or the law of the institution’s home state.

    (d)  The restriction in Subsection (7)(a) does not apply to an acquisition of, or merger transaction between, affiliate depository institutions.

    Amended by Chapter 169, 2017 General Session

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